Under pressure, ERP giants struggle to innovate

Very few larger companies are setting new trends in innovation however they continue to dominate the market.

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Will upcoming "dynamic" applications from Microsoft, Oracle and SAP add options and flexibility to ERP suites? Yes, says Paul Hamerman, VP of business process and applications at Forrester Research.

We are now in an era where the large software vendors are investing in innovation. Those vendors are feeling the pressure from upstart rivals and, to some extent, are finally hearing CIOs' demands (or, perhaps more accurately, complaints), he says. "Customers are demanding better usability, easier access to information, greater flexibility and lower cost of ownership," notes Hamerman in his 2007 report, "ERP Applications 2007: Innovation Rekindles."

But just how quickly the ERP giants will be able to cook up those innovative products remains a big question.

Analysts often note that the enterprise software space is predictably cyclical. Boom times with huge investment in software innovation are followed by lean years of R&D spending and over reliance on software fat margins. And then, every so often, a competitor comes along, threatening the giant enterprise software vendors, and the giants quickly earmark funds for "innovation"; Salesforce.com's emergence and Oracle's Siebel CRM On Demand response leap to mind.

At the moment that innovation urge has struck, Hamerman notes in his report. Hamerman focuses on innovative applications for ERP suites that have just arrived, or will soon, encompassing a broad range of functions, including finance and accounting, procurement, human resources, customer relations, order management, inventory and supply chain activities.

Even with the glut of mergers and acquisitions that have occurred during the last two years, Hamerman claims, "substantial innovation is under way." He terms the new breed of enterprise applications "dynamic" and says that they have resulted from the convergence of four technologies: content and collaboration, business process management, service-oriented architectures (SOA), and business intelligence.

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